Leading economist Joseph Stiglitz just published a provocative article in the New York Times where he argues that Japan is an economic model (although not a perfect one) rather than a cautionary tale. Most provocatively, he argues that adjusted for changes in labor-force size Japan has been outperforming the US and several other western economies. Japan's economy grew at an annual rate of 0.78% between 2001 and 2011, compared with 1.8% for the US. Yet, the US labor force rose by 9.2% while Japan's labor force shrank by 5.5%, consequently real output per worker grew at a faster pace in Japan than in the US (or in Australia, Germany or the UK).

http://opinionator.blogs.nytimes.com/2013/06/09/japan-i
s-a-model-not-a-cautionary-tale/?smid=fb-share

More familiar to those of us who follow Japan, it has achieved this with lower unemployment rates (peaking at 5.5% during the Lehman recession and 5.8% since 1990) and less economic inequality (with a Gini coefficient of .38 for the US versus .33 for Japan). Stiglitz is also optimistic about the prospects for Abenomics, although he emphasizes the importance of carrying through with structural reforms.

I would add that the Abe administration appears, perhaps unexpectedly, to be moving forward with structural reform of the electricity sector, which seems to have become the poster-child for structural reform overall. A government bill before the Diet calls for implementing a Nordic-style electricity market by 2019, while the Cabinet is pushing an ambitious off-shore wind program and realizing deep cuts in the cost of solar electricity by 2018.

Paul Midford